Question

# Capital Budgeting Methods Project S has a cost of \$9,000 and is expected to produce benefits...

Capital Budgeting Methods

Project S has a cost of \$9,000 and is expected to produce benefits (cash flows) of \$2,700 per year for 5 years. Project L costs \$26,000 and is expected to produce cash flows of \$7,100 per year for 5 years.

Calculate the two projects' NPVs, assuming a cost of capital of 10%. Do not round intermediate calculations. Round your answers to the nearest cent.

Project S: \$

Project L: \$

Which project would be selected, assuming they are mutually exclusive?

Based on the NPV values, -Select-Project SProject LItem 3 would be selected.

Calculate the two projects' IRRs. Do not round intermediate calculations. Round your answers to two decimal places.

Project S:   %

Project L:   %

Which project would be selected, assuming they are mutually exclusive?

Based on the IRR values, -Select-Project SProject LItem 6 would be selected.

Calculate the two projects' MIRRs, assuming a cost of capital of 10%. Do not round intermediate calculations. Round your answers to two decimal places.

Project S:   %

Project L:   %

Which project would be selected, assuming they are mutually exclusive?

Based on the MIRR values, -Select-Project SProject LItem 9 would be selected.

Calculate the two projects' PIs, assuming a cost of capital of 10%. Do not round intermediate calculations. Round your answers to three decimal places.

Project S:

Project L:

Which project would be selected, assuming they are mutually exclusive?

Based on the PI values, -Select-Project SProject LItem 12 would be selected.

Which project should actually be selected?

-Select-Project SProject LItem 13 should actually be selected.

Working:-

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